Abstract: Today we recognize that knowledge is not only a public good but also a global public good. We have also come to recognize that knowledge is central to successful development. The international community has a collective responsibility for the creation and dissemination of one global public good – knowledge for development. But how can we deal with the dilemma of reconciling the often contradictory incentives for the production and for the dissemination of knowledge? States must decide to what extent there should be public provision and to what extent private production should be encouraged through strengthened intellectual property rights. Designing the appropriate intellectual property rights regime entails balancing static and dynamic efficiency. Indeed, because research (knowledge) is one of the most important inputs into the production of further knowledge, raising the “price” of knowledge may actually reduce follow-on research and slow the pace of innovation. Thus, it is essential to reward research and innovation by firms while ensuring widespread access to knowledge and protection against monopoly rents. Issues of equity and efficiency interplay here, as most innovations incorporate ideas that are part of the common pool of knowledge. Narrowing the knowledge gap between developing and developed countries requires the construction of strong domestic knowledge infrastructures, most notably in education. Because knowledge is a global public good, Stiglitz argues that successfully meeting the challenges posed by knowledge externalities depends critically on cooperative efforts at the international level.

Keywords: dynamic efficiency, global public goods, incentives, information, innovation, intellectual property rights, knowledge, public goods, science, static efficiency, technological change, technology,